Report Flags ‘Money Laundering’ In Profit Transfers By Ncell Investors

A government-appointed investigation committee has recommended a comprehensive inquiry into allegations that profits earned in Nepal by investors of private telecommunications provider Ncell were illegally transferred abroad through informal channels such as hundi and cryptocurrency transactions.

The recommendation comes from a six-member committee led by former Auditor General Tanka Mani Sharma Dangal. According to sources familiar with the report, the committee has raised concerns that illicit financial mechanisms may have been used during the attempted sale and purchase of Ncell, warranting a thorough investigation.

The committee suspects that although the buyer in the proposed Ncell transaction may have paid the agreed amount to the seller, the funds could have originated from undisclosed or illegal sources. The report indicates that, since 2023, Ncell investors may have utilized cryptocurrency and hundi networks to transfer funds overseas outside the formal financial system.

According to the report, the buyer and seller may have entered into agreements that were subsequently submitted to government agencies, potentially creating an appearance of legitimacy for transactions involving illegally acquired funds. The committee noted that either the buyer directly paid the seller using illicitly obtained money or that funds derived from unlawful sources were indirectly involved in the transaction. It emphasized that the matter poses significant concerns for Nepal’s economy and requires an in-depth investigation.

Although the Central Investigation Bureau (CIB) of Nepal Police has filed several cases related to hundi and cryptocurrency-based financial transactions, the government has yet to initiate a dedicated investigation into the concerns raised by the committee.

Share Transactions Conducted Outside Nepal’s Banking System

The committee’s findings also suggest that financial settlements involving Ncell’s share transactions, including payments to Nepali shareholders, were conducted outside Nepal and bypassed the country’s banking system.

According to the report, Ncell’s ownership structure has changed hands 14 times since the company’s establishment. Most of these transactions reportedly occurred outside Nepal and were not fully disclosed to the country’s regulatory authorities. The committee found that records and transaction details related to these ownership transfers were either incomplete or not submitted to relevant government bodies. Furthermore, some Nepali shareholders reportedly received payments abroad rather than through Nepal’s formal banking channels.

Concerns Over Outstanding Bank Loans

The committee has also expressed concern over Ncell’s outstanding bank liabilities. Since its establishment, the company has borrowed a total of Rs 30.53 billion from various financial institutions, of which approximately Rs 15.85 billion remains unpaid.

The report highlights that Ncell Axiata Limited, whose ownership has been subject to repeated sale attempts, could potentially leave Nepal without assuming responsibility for these outstanding debts. An agreement signed on December 1, 2023, between Malaysia’s Axiata Group Berhad and the UK-based Spanglet reportedly included provisions for withdrawing collateral pledged against loans obtained from Nepali banks and disclaiming responsibility for those liabilities. However, because the Government of Nepal did not recognize the share transfer agreement, the arrangement has not been implemented.

The committee noted that despite objections raised by parliamentary committees, the Supreme Court, and government authorities—primarily over concerns related to tax obligations and regulatory compliance—Axiata Group appears to be attempting to exit Nepal while distancing itself from outstanding loan commitments.

Need for Stronger Regulatory Oversight

The report recommends close monitoring of the recovery of the remaining Rs 15.85 billion owed to Nepali banks. While approximately Rs 14.68 billion has reportedly been repaid, the committee expressed concern that financial institutions may face challenges recovering a substantial portion of the remaining debt.

It further observed that the failed share sale agreement appeared to include efforts by Axiata Group to avoid loan obligations by withdrawing collateral and limiting responsibility for existing liabilities. The committee has therefore called for enhanced regulatory oversight and monitoring by Nepal Rastra Bank to safeguard the interests of the banking sector and ensure accountability in future transactions.